FW-49 -- Buying Real Estate on the Cheap: Keibai Bukken

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A weekly roundup of how to be frugal in the world's most
expensive country to live (unless you read this!), written
and compiled by Wendy J. Imura.

Regular edition, March 20, 2005 Issue No. 49
+++ INDEX

- What's new (Buying Real Estate on the Cheap: Keibai Bukken)
- Bargain Roundup: (Cheap Dream Houses in Rural Japan)
- Frugal tips (More Keibai Bukken Information)
- Credits

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+++ WHAT'S NEW

Dear Frugal Readers,

I'm very excited about today's article because it introduces
a topic near and dear to my heart: real-estate bargains in
Japan. For longer-term residents or those with Japanese
spouses, considering a local real-estate purchase is
inevitable. Certainly, real estate prices have plummeted since
early 1990s, Bubble-era highs. You can now buy a new 70m2
condominium in downtown Tokyo for (on average) less than 40
million yen, a price unthinkable 15 years ago.

But buying real-estate in Japan is a lot like buying a new
car -- the value depreciates the minute you drive it off the
lot. Unlike many real estate markets where the value of
properties (and the buildings on top of them) usually
appreciate, most in Japan do not hold their value unless they
are extremely well located, or happen to be near a
newly-opened train or subway line or the subject of some other
development. The prime selling age for real estate is said to
be 10-15 years after construction, after which the value of
the building rapidly depreciates, leaving only the inherent
value of the land.

Thus, considering that you are purchasing an asset that is
almost GUARANTEED to decline in value, many properties still
appear overpriced. However, there is one often underlooked
source of bargain properties: 'keibai bukken,' or foreclosure
properties open for auction. (Note that the kanji for 'keibai'
can also be read as 'kyobai.') While the purchasing process
can be complicated, this is precisely the reason why most
Japanese purchasers avoid it -- paving the way for a
determined foreigner (usually with a Japanese partner) to find
some good deals.

In a special article for the Frugal Encyclopedia on
www.frugaljapan.com, intrepid foreign resident S. Perry writes
about her family's experience in purchasing a keibai bukken.
She writes:

"Keibai bukken are the seized assets of companies and
individuals who have gone bankrupt. At every local court
there is an office which deals with the auctioning off of
these properties. The court produces a file about each
property which includes a comprehensive report by a local real
estate agent detailing the condition and value of the place
with photos and maps.

The files on a given property are available for anyone to view
for a period of 4-6 weeks. Those who wish to bid on a property
must then fill out the application form and pay a deposit
of round 10% of the value. In the event that your bid wins
this money goes towards payment. If you lose, the money
is returned. If you win and are then unable to come up with
the funds within a given time frame you must forfeit your
deposit.

The bids are sealed and read out one by one on a set date
at the court. From there if you are lucky enough to win and
can organize a loan you can be in your new home within four
to six weeks. The court takes two weeks to change names
('meigi henko') and finish all the paperwork, payment goes
through after that and when payment is completed the property
is yours.

It sounds easy but there is are risks involved and pitfalls
to watch out for. As with any auction it pays to watch what
kind of prices the properties go for over a period of time
before rushing in and making bid which may be
over/under priced....Also, because the properties involved
were seized by the courts it is very possible that the person
to whom the house belonged is not at all happy about it. This
can be the biggest stumbling block; for example if the
previous owners have nowhere else to go they may still be
occupying the property. In such a case the court can issue
an order asking them to leave but in many cases it has little
effect. You may have to get the 'professionals' in to evict
them. The previous owners of the property we bought had
thankfully moved out. It is also possible that the previous
owners are no longer living there but have sabotaged
the place out of spite."

Interested in reading more? Check out the full article at:
www.frugaljapan.com/encyclopedia/encyclopedia.html
I've yet to find much information written on this topic in
English so far, which is why I'm so very happy that Frugal
Japan was able to secure a first-hand account. Even if you
are a long way from considering a purchase of your "dream
house" in Japan, it never pays to know about all the options
available.

Frugally yours,
Wendy J. Imura
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+++ BARGAIN ROUNDUP: (Cheap Dream Houses in Rural Japan)
Do you like web-surfing, particularly at real-estate
information sites? Maybe its just a personal hobby, but I can
easily waste more than a few hours at both Japanese and
English online information sites. Some of my favorite sites
are those that list online bargains for resort or rural
properties in Japan. Thought you'd have to pay top yen for
your own mountainside with an onsen? Take a look at these
bargain properties. (Japanese only)

Niseko Cottage - Close to Skiing, Fully Furnished --
16,800,000 yen
http://ralsnet.info/real-estate/det/s-217.htm
Are you a ski or snowboard enthusiast? Niseko's white powdery
slopes were recently called one of the best 'hidden gems'
in global ski resorts. Niseko itself is doing a booming
business from Australian tourists these days. This one-bedroom,
loft-equipped cottage is only five years old, and is located
only a one-minute walk from the ski bus station. Is 16.8
million yen a deal? Hard to say, but the cottage (check out
the photos) couldn't be prettier or better located.

Forest Cottage with Private Hot-Spring Bath - 10,000,000 yen
http://ralsnet.info/real-estate/det/s-470.htm
Located in Teshikaga-cho, one of Japan's most senic areas
and nearby to several lovely national parks, this 10 million
yen steal is a five-year old, like-new wooden condo, with
access to your own private onsen (hot-spring bath) feed.
The photos show you a detailed look at the interior (cute),
and the onsen-fed indoor bathtub. Definitely not centrally
located, but a real steal at less than US $100,00 for a
hot-springs-bath equipped second home.

$35,000 Hot Springs Condo in Jozankei, Sapporo?
http://fudosan.cbiz.ne.jp/show_sale.cgi?supplier=1058&id=38&bgcolor=FFCC99
Yep, it's rather hard to believe, but this is one of the
many extremely low-priced properties available out there.
Build in 1992, this one-room studio is about 10.6
tatami-mats, and features a private bath, toilet, and
mini-kitchen. The building itself has a common bathing area
(see pic), restaurant, and sauna. You get what you pay for,
of course (the bathtub looks to be in need of a good scrub),
but Jozankei itself is a beautiful onsen area very convenient
to Sapporo. Plus - its $35K!

Wantt to search for yourself? Take a look at the following
set of websites: http://www.rals.co.jp/resort/

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+++ FRUGAL TIPS (More Information about Keibai Bukken)
Interested in more information about keibai bukken? Read
Japanese? Check out the following website for a great glossary
of terms and explanation of the process.

http://www.keibai.co.jp/

More English tips to follow in future issues!
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+++ ABOUT US
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Written by: Wendy J. Imura (frugalwatch@japaninc.com)
Edited by: JI

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